The May Employment Report Is Right On Target - June 6, 2014

The U.S. Labor Department came out with a relatively reassuring report at 8:30 (EDT) this morning, when that government agency reported that the nation had added 217,000 jobs last month. That was right in line with expectations, which had most recently called for the creation of 218,000 new positions last month. Moreover, it was the fourth straight month in which non-farm payroll growth had topped 200,000.

At the same time, the Labor Department reported that the unemployment rate, which is based on a separate survey, held steady at 6.3%. Expectations here had been for a slight uptick to 6.4% in this politically sensitive rate, which had fallen sharply in April, declining from the prior month's 6.8% rate. The number of unemployed persons held steady last month at 9.8 million.

As noted, job growth has now topped 200,000 a month since February, with the monthly tabulations being, respectively, 222,000, 203,000, 282,000, and the aforementioned 217,000. At the same time, the labor force participation rate held steady at 62.8% in May, which is still somewhat concerning, and suggests that there remain many discouraged workers in the economy, five years into the current modest business expansion.

Also, average hourly wages for all private workers ticked up by 0.2% in May, which was in line with the consensus forecast, and was an improvement over April's unchanged reading. The average hours worked held steady at 34.5.

As to individual sectors, jobs were added in the construction, manufacturing, services-providing markets. Also, the number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers), held relatively steady at 7.3 million last month. The number of discouraged workers also held reasonably steady last month. These are former workers now considered as no longer part of the workforce and thus are not part of the 6.3% jobless rolls.

Looked at as a whole, this was a benign and constructive report., On the one hand, growth was strong enough to suggest that the heretofore missing part of the puzzle, job growth, is back in the picture. On the other hand, growth is not too strong in this area to cause the Federal Reserve to abandon its accommodative monetary ways all that quickly.

At the time of this article's writing, the author did not have positions in any of the companies mentioned.